China: Qingdao Police Probe Decheng Mining Over Port Fraud Claims

Metals are seen being transported at Qingdao port, Shandong province.(Reuters)

Police are investigating a private metals trader, Decheng Mining, over a suspected metal financing scam at the Qingdao port in Shandong province, China.

The probe taking place at the world's seventh-biggest port is looking into whether single metal cargoes were used multiple times in order to secure financing.

The Qingdao port authority and the local police are investigating Decheng, according to Reuters, who cited a police officer involved in the case.

"Decheng is under investigation for its financing activities at Qingdao port," the police officer told Reuters. A second officer told the news agency that the company was being investigated over fraud claims.

The probe has hit metal prices, sparking fears of a crackdown on the use of metals as collateral for finance.

Qingdao-based Decheng Mining is part of Dezheng Resources Holdings, chaired by the Singaporean Chen Jihong.

Singapore's Ministry of Foreign Affairs (MFA) told Reuters it was aware of the situation but did not say whether Chen had been detained.

"MFA is aware of the case and is rendering consular assistance to Mr Chen and his family," an MFA spokesman said.

The investigation into alleged fraud at the port has prompted companies including Citic Resources, Standard Bank and GKE Corp to issue warnings that they may be affected. Shares in Citic Resources slid 8% on the back of their statement.

Meanwhile, the Wall Street Journal reported some Western banks are concerned over the possibility of a fraud case at another Chinese port.

Penglai port in Shandong province is the second port in question, the newspaper said.